A partnership distributes a 'hot asset' (unrealized receivable) to a partner in a liquidating distribution. The partnership's basis in the receivable is $0 and FMV is $10,000. The partner's outside basis is $20,000. What is the partner's basis in the receivable?

1. Rule: In a distribution, the basis of unrealized receivables and inventory generally cannot exceed the partnership's basis in those assets.<br/>2. Partnership Basis: $0.<br/>3. Partner's Basis: Limited to $0.<br/>4. Note: The partner recognizes a capital loss for the remaining unallocated outside basis ($20,000) in a liquidating distribution if only money and hot assets are received.